What Happens to VA Home Loans if The Government Shuts Down?

At the start of April 2011, House and Senate officials found themselves still working to pass a budget to keep the federal government running. As time runs out, a shutdown of government services and programs is a very real possibility. Many veterans and government workers pay close attention to the headlines when a government shutdown becomes possible when a federal budget can’t be worked out in time.

If the White House vetoes a stopgap spending measure to extend the work of the government, a shutdown is possible–and that could have implications for those applying for VA loans or trying to pay their VA mortgages on time. If the budget is passed, it’s nothing more than a close call for government employees including current military members.

But what happens if the government does shut down at some point–whether because of the current budget impasse or one in the future?

For current military members and veterans applying for VA loans, a shutdown could mean a delay in approving VA loans or getting appraisals through the VA system. It doesn’t mean a loan will definitely be stopped in its tracks, but any shutdown of the federal government that extends to the Department of Veterans Affairs could extend the process depending on where an individual borrower was at when government funding runs out.

In all cases, it’s best to contact the lender directly to get a status report. Don’t assume your loan has been held up–get some advice from the lender and proceed from there. It could be that your paperwork was already approved and is moving ahead.

For current military members trying to pay their mortgages on time, the consequences could be serious depending on how long a shutdown lasts. Military pay could be delayed, naturally causes financial hardship in all areas–especially for military borrowers on tight budgets. If you are concerned about your ability to pay your mortgage during a government shutdown, contact the lender directly and ask what options you might have while your pay issues are being sorted out.

The worst thing an active duty VA borrower can do is to cross his or her fingers and hope for the best. Work with your lender to avoid missing a payment on your VA mortgage while the House and Senate try to come to a compromise in the middle of any shutdown–in most cases it should be understood that your financial difficulties are situational and temporary, but you can’t expect much leeway from the bank unless you call them before the financial situation gets out of control. A government shutdown is by its very nature a temporary thing–but there’s no way to predict how temporary it may be.

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